Victoria’s battery storage won’t be ready for this summer

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Victoria will likely go without its much-vaunted battery storage installations this summer, following months of delays likely to be centred around finance and contracting.

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Victoria’s plans to add at least 100MWh of battery storage to its grid by January – to help keep the network steady and prevent unwanted load-shedding – appear to have come unstuck.

The state government – which this week unveiled the details of the country’s biggest renewable energy auction (650MW) – has still to announce the results of its much vaunted earlier tender for two large scale battery storage installations in the west of the state.

The two projects – each of 20MW and producing a combined 100MWh – were supposed to be online by January 1. But despite attracting more than 100 proposals, the tender winners have still not been announced, way beyond the planned deadline of the end of the August.

A spokesperson for minister for energy Lily D’Ambrosio said the government is still assessing proposals and further announcements will be made in due course.

“We’re making sure Victoria is equipped with the next generation of energy technologies that will support a more resilient energy system,” the spokesperson said in an emailed statement.

The assumed presence of the two batteries formed a key part of the strategy drawn up by the Australian Energy Market Operator to ensure the lights stayed on in Victoria this summer – the first summer without the big Hazelwood brown coal generator that closed down earlier this year.

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Victoria and South Australia are considered the states most exposed to potential outages this summer, although South Australia has successfully installed emergency back-up generators, and the Tesla big battery at Jamestown appears to be on track to operate by December 1.

Indeed, SA energy minister Tom Koutsantonis said last week that NSW – which he said had the highest penetration of coal power anywhere in the world – had more to worry about this summer, particularly after its near misses earlier this year when its biggest coal and gas plants failed.

A spokesman for AEMO indicated that the organisation was not unduly worried about the absence of the storage in Victoria.

“AEMO has been working to procure approximately 1000 megawatts of strategic reserves through the Reliability and Emergency Reserve Trader (RERT) process amongst other initiatives,” he said.

“We are supportive of any additional storage capacity in Victoria, however we will not be relying on its capacity for this summer.” Apart from reserve capacity put in place, AEMO will be drawing on significant amounts of demand management.

The short-listed applicants for the Victoria battery storage tender have not been identified and neither have the reasons for the delay. The tender documents suggested negotiations would wrap within a few weeks of the short-list being identified in early August.

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But it is assumed that the issue must be about money, and whether the total of $25 million of grant funding proposed by the government was enough to overcome the lack of incentives for battery storage in the broader wholesale market.

Singapore-Based Nexif Energy made an interesting point earlier this week after announcing its plan to install 10MW/10MWh of lithium ion battery storage next to its Lincoln Gap wind farm in South Australia, and possible expand it three fold in the second stage.

Nexus’s Zeki Akbas said battery storage as a stand-alone business was not yet sustainable as a business proposition, but probably was as part of a wind or solar project where it could get added revenue from “time-shifting” the output and pushing more towards peak pricing periods.

This is largely because the market for network and ancillary services is not yet developed in Australia, and rules that would further encourage battery storage over gas peaking stations – such as 5-minute settlements – have been pushed out to 2021 or beyond.

This is why Australia’s biggest battery storage project – the Tesla big battery in South Australia – is reliant on government contracting and funding to make its business case (and will not actually be able to time shift the output of the already contracted Hornsdale wind farm).

The smaller Wattle Point battery project (also adjacent to a wind farm) is also receiving ARENA funding, and will provide services such as time shifting, fast response and local micro-grid back-up in the case of a broader outage.

Another big battery storage project – the 100MW/100MWh put forward by Liberty Onesteel for its Whyala steelworks – will be part of a comprehensive “behind the meter” solution that includes solar, pumped hydro and demand management.

It is likely that Victoria can resolve the issue – either by clarity through contracting specific services or perhaps some extra money. The suggestion is that a further announcement will be made before the end of the year.

That won’t get a battery installed by January 1, or even before the end of summer, but storage will be essential to its plans of reaching 40 per cent renewables by 2025, and the sooner it starts the better.

Nexif Energy’s Akbas also pointed to the issue surrounding connection agreements, and the challenges facing network operators and the market operator to incorporate these technologies into the grid for the first time.

Conergy’s Lakeland solar and storage project in north Queensland- the first such project to be connected to the main grid – has suffered numerous delays as the market operator and local network wrestle with various connection issues.

The situation is further complicated because of the varying attributes of energy storage – which can be used for a range of options including reinforcing grid infrastructure, deferring network spending, providing network services such as frequency control, time shifting renewables and creating isolated micro-grids.

 

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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7 Comments
  1. Hettie 1 year ago

    The mills of gov grind slowly.
    Bureaucrats can stuff anything up, and if they can, they will.

    • Joe 1 year ago

      I can see Premier Dan getting plenty of ‘advice’ from two Tongues Turnbull and his hand puppet Joshie if there are ‘interruptions’ to Vic’s electricity supply this summer. Premier Jay copped plenty in the past. But Turnbull & Joshie are now strangely very quiet about SA…all those new RE projects have shut them up. But Premier Dan could be a likely new target. The COALition have nothing positive to say so it is Plan A…give Labor States a headkicking which gives Rupert’s newsrags something to write.

      • Hettie 1 year ago

        Let’s just see. If the UK Home Office declines to expedite John Alexander’s renunciation of citizenship, on the grounds that he is now a private citzen, the Libs may find themselves without a candidate for Bennelong.
        Oh dear How sad.
        Pushing for a fast result would clearly be undue influence. And this is NSW. We have ICAC.
        In any case, KK will give JA a run for his money. So many want this ship of fools at the very bottom of the deepest ocean.
        Barney will almost certainly get back, but there are more to come, once the High Court comes back in Feb. Maybe sooner. They rise Dec 15. Still time.
        Easter should see a change of Gov’t.
        On a happier note, at last my solar system is properly registered, and between FIT and Low income rebate, I am confident of negative power bills until winter. If I can manage air con by then, heating costs will plummet.
        Oh joy!

        • Joe 1 year ago

          Go well, young Hettie

  2. Sally Noel Triggell 1 year ago

    Another great win for the major coal party, that runs Australia.

  3. Peter F 1 year ago

    One could remark that an integrated utility like the SECV would capture the entire value stack from battery storage and could easily make a case for widely distributed battery storage at substations, at or behind the meter and even next to street corner transformers. However that might be seen as “socialism” which is bad, even if power prices are 40% lower.

    If there are La Nina weather patterns with 3-4 day sustained high temperatures 2x 20MW will not be enough to keep Victorias grid alive or even 100 MW of diesels that AEMO is putting in to the system.

    The good news is the worst heatwaves as far as electricity demand is concerned usually occur in February so that gives them an extra 5-6 weeks to sort things out.

  4. Brad Sherman 1 year ago

    These experiences reinforce my view that the old vertically integrated generation-transmission-retail model is superior to the defective model of privatisation implemented in Australia. The vertically integrated model can work well through either a effectively regulated private company or a publicly owned enterprise (like Actew, SECV, Snowy Hydro in the olden days).The biggest problem with public/municipally owned water, electricity, telecommunications was that governments could not be trusted to keep their hands out of the pockets of these publicly run enterprises and would resort to stunts such as declaring ridiculously large and inappropriate dividends to cover expenditures in unrelated budget areas. They were not allowed to run themselves as proper businesses.

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